diff --git a/.gitignore b/.gitignore
index fa3783f..e8a7a3e 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,4 +1,5 @@
 .vscode/settings.json
+.idea
 node_modules
 package-lock.json
 dist
diff --git a/index.ts b/index.ts
index 7e47118..07a7926 100644
--- a/index.ts
+++ b/index.ts
@@ -1,4 +1,4 @@
-import { join } from 'path';
+import { join, relative } from 'path';
 import { Plugin } from 'rollup';
 import {
 	CompilerOptions,
@@ -65,12 +65,20 @@ export const typescriptPaths = ({
 				return null;
 			}
 
-			const targetFileName = join(
-				outDir,
-				preserveExtensions
-					? resolvedFileName
-					: resolvedFileName.replace(/\.tsx?$/i, '.js'),
-			);
+			const processedFileName = preserveExtensions
+				? resolvedFileName
+				: resolvedFileName.replace(/\.tsx?$/i, '.js');
+
+			/*
+			 *  Do not use:
+			 *  - path.dirname(tsConfigPath) -> using abs. path to <proj_root>/test/<tsconfig>
+			 *  - __dirname                  -> using abs. path to compiled plugin files <proj_root>/dist
+			 *  - process.env.PWD            -> non cross-platform
+			 *  instead of process.cwd()     -> using abs. path to <proj_root>/<tsconfig>, that is correct
+			 */
+			const targetFileName = typeof compilerOptions.baseUrl === 'undefined'
+				? join(outDir, relative(process.cwd(), processedFileName))
+				: join(outDir, processedFileName);
 
 			const resolved = absolute
 				? sys.resolvePath(targetFileName)
diff --git a/package.json b/package.json
index 24962e9..7eba1e7 100644
--- a/package.json
+++ b/package.json
@@ -8,6 +8,7 @@
     "dist"
   ],
   "scripts": {
+    "test:wo-baseurl": "WO_BASEURL=true npm run test",
     "test": "npm run prepare && node test",
     "preversion": "npm test",
     "prepare": "rm -rf dist && tsc"
diff --git a/readme.md b/readme.md
index 782e88b..2137d6c 100644
--- a/readme.md
+++ b/readme.md
@@ -53,7 +53,8 @@ export default {
 ## Options
 
 - **`absolute`:** Whether to resolve to absolute paths; defaults to `true`.
-- **`nonRelative`:** Whether to resolve [non-relative paths](https://www.typescriptlang.org/docs/handbook/module-resolution.html#relative-vs-non-relative-module-imports) based on tsconfig's `baseUrl`, even if none of the `paths` are matched; defaults to `false`.
+- **`nonRelative`:** Whether to resolve [non-relative paths](https://www.typescriptlang.org/docs/handbook/module-resolution.html#relative-vs-non-relative-module-imports) based on tsconfig's `baseUrl`, even if none of the `paths` are matched; defaults to `false`
+  - The `baseUrl` parameter must be specified in _tsconfig.json_
 - **`preserveExtensions`:** Whether to preserve `.ts` and `.tsx` file extensions instead of having them changed to `.js`; defaults to `false`.
 - **`tsConfigPath`:** Custom path to your `tsconfig.json`. Use this if the plugin can't seem to find the correct one by itself.
 - **`transform`:** If the plugin successfully resolves a path, this function allows you to hook into the process and transform that path before it is returned.
diff --git a/test/index.js b/test/index.js
index 95f7c86..a7de5b5 100644
--- a/test/index.js
+++ b/test/index.js
@@ -6,27 +6,31 @@ const typescriptPaths = require('../dist').default;
 
 const transform = (path) => path.replace(/\.js$/i, '.cjs.js');
 
+const tsConfigPath = process.env.WO_BASEURL
+	? 'tsconfig-wo-baseurl.json'
+	: 'tsconfig.json'
+
 const plugin = typescriptPaths({
-	tsConfigPath: resolve(__dirname, 'tsconfig.json'),
+	tsConfigPath: resolve(__dirname, tsConfigPath),
 });
 
 const pluginNonAbs = typescriptPaths({
-	tsConfigPath: resolve(__dirname, 'tsconfig.json'),
+	tsConfigPath: resolve(__dirname, tsConfigPath),
 	absolute: false,
 });
 
 const pluginNonRelative = typescriptPaths({
-	tsConfigPath: resolve(__dirname, 'tsconfig.json'),
+	tsConfigPath: resolve(__dirname, tsConfigPath),
 	nonRelative: true,
 });
 
 const pluginTransform = typescriptPaths({
-	tsConfigPath: resolve(__dirname, 'tsconfig.json'),
+	tsConfigPath: resolve(__dirname, tsConfigPath),
 	transform,
 });
 
 const pluginPreserveExtensions = typescriptPaths({
-	tsConfigPath: resolve(__dirname, 'tsconfig.json'),
+	tsConfigPath: resolve(__dirname, tsConfigPath),
 	preserveExtensions: true,
 });
 
@@ -86,11 +90,19 @@ try {
 	// skips non-relative paths unless enabled
 	strictEqual(plugin.resolveId('foo/bar', ''), null);
 
-	// resolves non-relative from baseUrl even if no path is matched
-	strictEqual(
-		pluginNonRelative.resolveId('foo/bar', ''),
-		join(__dirname, 'foo', 'bar.js'),
-	);
+	// resolves non-relative from baseUrl even if no path is matched, baseUrl is necessary in config
+	if (!process.env.WO_BASEURL) {
+		strictEqual(
+			pluginNonRelative.resolveId('foo/bar', ''),
+			join(__dirname, 'foo', 'bar.js'),
+		);
+	} else {
+		console.log(
+			'SKIP test forced nonRelative paths:\n',
+			'- Irrelevant since baseUrl is not provided in this case\n',
+			'- See WO_BASEURL environment variable in the test code'
+		)
+	}
 
 	// resolves as a relative path with option `absolute: false`
 	strictEqual(
diff --git a/test/tsconfig-wo-baseurl.json b/test/tsconfig-wo-baseurl.json
new file mode 100644
index 0000000..1318daf
--- /dev/null
+++ b/test/tsconfig-wo-baseurl.json
@@ -0,0 +1,13 @@
+{
+	// comments should work
+	"compilerOptions": {
+		"paths": {
+			"@foobar": ["./test/foo/bar"],
+			"@foobar-react": ["./test/foo/bar-react"],
+			"@bar/*": ["./test/bar/*"],
+			"bar/*": ["./test/bar/*"],
+			"@js": ["./test/js"],
+			"$/*": ["./test/*"]
+		}
+	}
+}
diff --git a/tsconfig.json b/tsconfig.json
index 01f619d..9a445e3 100644
--- a/tsconfig.json
+++ b/tsconfig.json
@@ -5,6 +5,7 @@
 		"lib": ["esnext"],
 		"declaration": true,
 		"outDir": "dist",
+		"sourceMap": true,
 
 		"strict": true,
 		"noUnusedLocals": true,